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Fraud is alarmingly widespread among cryptocurrency investment promoters, according to a report by the Texas State Securities Board. Texas leads the United States in cryptocurrency crackdowns.

The board compiled its findings in a report, where it discovered that among 32 crypto investment promoters it had investigated during a four-week period, none were registered to sell securities. That’s a violation of the Texas Securities Act.

Moreover, a shocking 21 promoters (or two-thirds) failed to provide a physical address for their businesses, so that investors who were defrauded would not be able to locate them to serve them with a lawsuit or seek other recourse. And at least five guaranteed unrealistically exorbitant investment returns.

Here are some other findings in the 14-page report, entitled Cryptocurrency Investment Promoters Are Mostly Frauds: Regulatory Report:

Seven promoters offered securities tied to a newcryptocurrency.

At least five promoters all but ignored investing risks by guaranteeing returns, some as high as 40% per month.

Only 11 promoters provided potential investors with a physical address, leaving investors with little recourse if they lost their money.

Six of the offerings involved payment of a commission to investors who recruited new investors into the scheme.

The investigation resulted in seven legal actions for fraud and illegal marketing. Keep in mind that that’s only for investigations conducted during a four-week period in the state of Texas. Extrapolate that over one year and to 49 other states in the United States alone.

Regulators said crypto investment promoters are often misleading potential investors based on sham promises and shady info.

Iles continued: “There is a lot of hype surrounding cryptocurrencies, but the companies offering investments are often not disclosing all the information investors need to make an informed decision. Investors risk giving their hard-earned money to anonymous promoters hiding behind websites who have no intention of making good on their promises.”

Promoters Hype Bitcoin Price Spikes

Not surprisingly, the Texas State Securities Board found that most promoters hyped the incredible returns of bitcoin, whose price skyrocketed in 2017. They did that even when the products they marketed had nothing to do with bitcoin.

The Board also found that promoters routinely failed to disclose the huge risk of hacks. Cybertheft and hacks are all-too-common among even top cryptocurrency exchanges like Mt. Gox and Coincheck. In those instances, many customers lost their investments, and are still trying to get them back.

The securities board warned that benign profile photos on a company’s website often hide the insidious nature of its dubious investment products.

In at least one instance, the Board discovered that a promoter had used a stock photo of a model and claimed that was one of its executives. In other instances, executives lied about their professional credentials.

“Charming portraits and lengthy profiles may convey a sense of comfort and security, but virtually anyone from anywhere may be lurking behind the flashy graphics,” the report read.

Celebrities Promoters: You Can Be Sued

Regulatory scrutiny is heating up in the United States, India, South Korea, China, Japan and Russia as crypto slowly but surely seeps into the mainstream consciousness.

As CCN previously reported, securities attorneys are also warning celebrities who endorse initial coin offerings that they could be sued for promoting sham ICOs. Like prospective investors, celebrities should do their own due diligence before shilling a crypto product.

Despite the scams in the unregulated cryptocurrency industry, Old Money is starting to pour into the space. Case in point: The Rockefeller family (estimated net worth: $1 trillion) is investing in blockchain startups. And they’re taking a long position.